The COVID-19 pandemic has put many local companies on the brick of insolvency. UA Cinema Circuit Limited has recently filed a compulsory winding-up petition to the High Court after 36 years of business in Hong Kong (HCCW 99/2021). Generally, a company will file a winding-up petition to the Court if it is unable to pay debts, or its members have passed a special resolution that the company be wound up by the Court.
However, a creditor can also file such petition to the Court. For example, Webport Limited served a winding-up petition against Hong Thai Travel Services Limited in July last year to force Hong Thai to repay its debts (HCCW 243/2020).
Upon commencement of the winding-up, the company’s bank account will be frozen and property transfer is prohibited, unless authorized by the Court. If the Court grants a winding-up order, the appointed provisional liquidator will summon meeting of creditors and contributors to determine whether to apply to the Court for appointing a liquidator. The provisional liquidator will also interview directors and instruct them on preparing statement of affairs. After deduction of all fees and expenses, if there are still funds remaining in the estate of the company, the liquidator will distribute this sum to creditors whose claims have been admitted.
If you are considering commencing a winding-up petition, you should engage a solicitor. If you have any enquiries, please feel free to call or WhatsApp Mr. Lam at 6977 6708.